Introduction

As we step into 2025, we anticipate a year filled with significant developments in the financial services industry. With ongoing regulatory reforms, evolving judicial interpretations, and key updates from local and international courts, stakeholders can expect greater clarity and direction in compliance and governance.

The financial sector, both banking and non-banking, will continue to witness transformations driven by regulatory bodies and industry professionals. These changes aim to enhance transparency, efficiency, and resilience, ensuring that Mauritius remains a competitive and well-regulated financial hub. We look forward to an eventful year marked by progressive reforms, judicial insights, and a stronger legal framework shaping the industry’s future.

1. Taxation Updates: MRA Tax Ruling TR 277

The Mauritius Revenue Authority (MRA) recently issued Tax Ruling TR 277, a ruling providing clarity on the tax treatment of income derived by a global business company. The Applicant, holder of a global business licence, was authorised as an investment dealer to provide trading services to its clients on a trading platform which was hosted by a datacentre in New York. It did not trade for its own account and the licence excluded underwriting. The Applicant sought confirmation on whether it satisfies the conditions of section 23 D of the Income Tax Regulations 1996 (which states the conditions for eligibility to exemption) and whether it was eligible for the 80% partial exemption on its income derived under its investment dealer licence. The ruling provides that the Applicant will be exempted to 80% partial exemption on income derived by it as an investment dealer provided that it:

• carries out its core income generating activities in Mauritius;
• has an office in Mauritius;
• has proper substance requirements, such as employing an adequate number of suitably qualified persons in Mauritius to carry out its core income generating activities; and it
• incurs a minimum expenditure proportionate to its level of activites.

This ruling underlines the importance of compliance with the Income Tax Act while optimising the benefits under the Mauritius tax regime. Businesses are thus encouraged to reassess their tax structures to ensure alignment.
 

2. Financial Services Commission Communiqués

Highlights of FSC’s Guidelines for Determination of Completeness of an Application for a Licence
The Financial Services Commission (FSC) of Mauritius issued new Guidelines for the Determination of Completeness of an Application for a Licence on 10 December 2024, under section 7(1)(a) of the Financial Services Act (FSA). The objective of the guidelines is to streamline the application process for licences, ensuring compliance and clarity for applicants and provide a clear framework for assessing the completeness of licence applications, including authorisations, registrations, and approvals under the FSA. Additionally, it enhances Enhance transparency in the licensing process and promote compliance with regulatory requirements.

The guidelines apply to applications for general licences/authorisations under Part IV of the FSA regarding matters relating to the regulation of financial matters, and essentially applications for special authorisations relating to Authorised Companies under section 71A and section 72 (for Global Business Licence) of the FSA. These guidelines do not apply to:

• application of specific licences such as Investment Banking Licence under section 79A of the FSA; the Securities Exchange Licence and related licences under section 9, 10, and 11 of the Securities Act; a Management Company Licence under section 77 of the FSA; and a licences under the second schedule of the Virtual Asset and Initial Token Offering Services Act (VAITOSA); and to
• an application which is subject to any information sought under sections 83 or 87 of the FSA; an application which is subject to any action to be undertaken at the level of the Registrar of Companies; an application under the Insurance Act, Private Pension Scheme Act, and Captive Insurance Act; and an application for registration to carry out the business of initial token offerings under the VAITOSA.
   

Submitting an Application

• Applications must comply with section 16 of the FSA and other specified requirements.
• The FSC reserves the right to request additional information and may issue multiple queries during the review process.
• Applications that fail to include all required information initially may not be subject to follow-up by the FSC.

Determination of Completeness

• An application is deemed complete when all required information is submitted to the satisfaction of the FSC.
• Applicants will receive notification of the completeness status via the FSC One platform.
• Once the FSC determines that the application is complete, it will process the application within 10 working days.

Deemed Withdrawal of Applications
Applications will be deemed withdrawn if:

• The applicant fails to provide additional requested information within 15 days of the query from the FSC
• Notification of withdrawal status will be issued through the FSC One platform.
• Processing fees will not be refunded, although any pre-paid annual fees will be returned.

Action Points for Industry Stakeholders

• Ensure compliance with the updated application process by reviewing the new guidelines.
• Use the FSCOne platform effectively for submissions and tracking application statuses.
• Address any queries raised by the FSC promptly to avoid deemed withdrawals.

These guidelines emphasise the FSC's commitment to fostering a transparent and efficient licensing framework. Industry players are encouraged to align their practices to these updated requirements to facilitate timely approvals

3. Supreme Court Ruling on Tax Exemption for Interest Income: Alteo Energy Ltd v Assessment Review Committee & Anor [2025 SCJ 47]

In a landmark decision, the Supreme Court of Mauritius has ruled in favour of Alteo Energy Ltd in its appeal against the Assessment Review Committee (ARC) and the Director-General of the Mauritius Revenue Authority (MRA) concerning the partial tax exemption on interest income.

Background of the Case
Alteo Energy Ltd, engaged in electricity production and selling to the Central Electricity Board (CEB), sought an 80% exemption on interest income earned from depositing excess cash with a related entity. The company based its claim on Item 7, Sub-Part B, Part II of the Second Schedule to the Income Tax Act (ITA) and Regulation 23D(2) of the Income Tax Regulations 1996. However, the MRA rejected the exemption, arguing that the interest income was not derived from the company's Core Income Generating Activities (CIGA).

The ARC upheld the MRA’s decision, leading to this appeal before the Supreme Court.

Key Issues and Supreme Court Findings
The Supreme Court focused on whether interest income must originate from CIGA to qualify for the partial tax exemption. The Court ruled that:

1. The ITA does not explicitly require interest income to originate from CIGA for exemption under Item 7.
2. The Court disagreed with the ARC's restrictive interpretation of Regulation 23D(2). It found that the term “includes” in the definition of CIGA does not limit eligible activities solely to funding, financing, and risk management.
3. The Court examined the legislative intent and history and the Finance (Miscellaneous Provisions) Act 2018, confirming that the 80% exemption was meant to apply broadly to companies beyond the global business sector.

Decision and Impact
The Supreme Court allowed the appeal, finding that the ARC wrongly introduced an additional condition requiring interest income to originate from CIGA. The case has been remitted to the ARC to reconsider the exemption in line with the Court’s interpretation.

This judgment clarifies the scope of tax exemptions for corporate interest income and reaffirms the principle that tax laws must be interpreted strictly in favour of the taxpayer where ambiguity exists.